The fate of Detroit's Big Three

The cost of bailing out American automakers, and the cost of letting them fail

"Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler, and Ford," said David Brooks in The New York Times. The $50 billion bailout proposed for the big automakers—on top of an earlier $25 billion in loans—isn't like the Wall Street bailout, which was necessary to save the entire financial system. Somebody will always make cars in America—what we're talking about is rescuing the "politically powerful corporations" that are making them now.

"This isn't just about three large Michigan-based companies and the 240,000 people who work for them," said Ron Gettelfinger, president of the United Auto Workers, in The Washington Post. Detroit also provides jobs for millions of workers who work for car dealerships and thousands of other small- and medium-size businesses in towns across America. The domestic auto industry can't survive in today's unstable economy without government help, and "the costs of failure are unacceptable."

It's undeniable that the repercussions would be widespread and painful if the federal government let GM fail, said The Washington Post in an editorial. But if Congress and the president step in, they should insist on radical reform in return—including lower labor costs and elimination of duplicative dealerships. Otherwise, "Detroit will be back for more help before long."

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Everybody knows the automakers have to cut salaries and hire better managers, said Daniel Gross in Newsweek online. But “if the Big Three can be saved, they can only be saved by government.” The American auto industry has already failed.

"The Big Three deserve some scorn" for clinging too long to their gas-guzzlers, said Jonathan Chait in The New Republic online. But there's something missing from the editorials demanding reform or saying we should let the free market devour Detroit's dinosaurs. The automakers' transformation is already well underway, so the question is whether we give them time to finish the job.

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